TJX Companies Inc. Earnings Cheat Sheet: Margin Expansion Driven by Revenue Growth, Profit Rises

S&P 500 (NYSE:SPY) component TJX Companies Inc. (NYSE:TJX) reported its results for the second quarter. The TJX Companies, Inc. is an off-price apparel and home fashions retailer in the United States and worldwide.

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TJX Companies Earnings Cheat Sheet for the Second Quarter

Results: Net income for TJX Companies Inc. rose to $348.3 million (90 cents per share) vs. $305 million (74 cents per share) in the same quarter a year earlier. This marks a rise of 14.2% from the year earlier quarter.

Revenue: Rose 7.9% to $5.47 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: TJX beat the mean analyst estimate of 89 cents per share. Analysts were expecting revenue of $5.43 billion.

Quoting Management: Carol Meyrowitz, Chief Executive Officer of The TJX Companies, Inc., stated, “I am very pleased with our strong second quarter performance as our 23% increase in adjusted earnings per share exceeded the high end of our already raised expectations. Further, these results mark the sixth consecutive year of very strong second quarter operating performance. We believe that this speaks to the consistency of TJX and the great flexibility of our business model, which has enabled us to succeed year after year, through both strong and weak economic environments. Customer traffic continues to be up over large increases in the last two years, as our tremendous values attract new and loyal customers. As we enter the third quarter, we see a marketplace full of fabulous brands and fashions and we will be utilizing the flexibility in our inventory position to take advantage of these opportunities. In addition, we will be significantly increasing our marketing penetration in the second half of the year, leveraging our marketing spend, which we believe will also draw consumers to our stores. We are confident in our prospects for the second half of 2011 and our ability to drive sales and profits in the short and long term, through various economic and retail cycles.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 4.1% to $5.22 billion in the first quarter. The figure rose 6.6% in the fourth quarter of the last fiscal year from the year earlier and climbed 5.4% in the third quarter of the last fiscal year from the year-ago quarter.

Last quarter’s profit increase breaks a streak of two consecutive quarters of year-over-year profit decreases. In the first quarter, net income fell 19.8% while the figure dropped in the fourth quarter of the last fiscal year.

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 78 cents versus a mean estimate of net income of 80 cents per share.

Margins rose in the first quarter after falling the quarter before. Gross margin rose 0.7 percentage point to 27.3% from the quarter earlier quarter. In the fourth quarter of the last fiscal year, the figure rose 0.6 percentage point to 26.7% from the year earlier quarter.

Competitors to Watch: Gordmans Stores, Inc. (NASDAQ:GMAN), Citi Trends, Inc. (NASDAQ:CTRN), Stein Mart, Inc. (NASDAQ:SMRT), Syms Corp. (NASDAQ:SYMS), Wal-Mart Stores, Inc. (NYSE:WMT), Ross Stores, Inc. (NASDAQ:ROST), Fred’s, Inc. (NASDAQ:FRED), J.C. Penney (NYSE:JCP), Target Corporation (NYSE:TGT), Macy’s, Inc. (NYSE:M), and Dillard’s, Inc. (NYSE:DDS).

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(Source: Xignite Financials)